TCC highlights importance of schedules of derogations in JCT contracts

This TCC Part 8 decision concerns the interpretation of an amended JCT Design and Build Contract 2016 for the refurbishment of the Baltic Exchange in London. The contractor, Mace, was granted extensions of time by the Employer’s Agent to reflect design changes and planning-related delays. The employer, Baltic, challenged those extensions in adjudication and succeeded in having them reduced to zero.

Mace then turned to the Court to determine how key parts of the contract should be construed. The dispute exposed tensions between different parts of a heavily amended JCT contract, which pulled in different directions on key issues, particularly design responsibility and risk allocation.

The Court was therefore asked to determine how the contract should be interpreted. In doing so, it addressed two issues of wider importance. The first was how priority clauses operate in practice in amended JCT contracts. The second was whether the extension of time mechanism is a prospective exercise, even when considered after the event.

Key takeaways

• Employers should not seek to rely on ‘catch-all’ priority drafting at the front-end of contract documents.
• Contractors should recognise the value of well-drafted derogations in qualifying or deferring risk, particularly in relation to design responsibility.
• All project participants should maintain strong contemporaneous records, as these will be critical to any prospective assessment of delay.

Decision

The Court confirmed that both the Schedule of Derogations and the tender clarifications formed part of the contract.

Importantly, it held that the Schedule of Derogations was not overridden by the amended JCT terms or the Schedule of Amendments.  Importantly, it held that the Schedule of Derogations was not overridden by the amended JCT terms or the Schedule of Amendments, and instead was to be read as part of the contract as a whole.

The judge emphasised that parties do not include detailed negotiated documents for them to be ignored. The derogations were therefore treated as supplementing and clarifying the contractor’s obligations, rather than conflicting with or modifying them in a way that would trigger the priority clause.

On design responsibility, the Court agreed with Mace. Although JCT Design and Build contracts usually place full design responsibility on the contractor, here responsibility for certain items was expressly carved out in the Schedule of Derogations. That responsibility only passed to the contractor once designs were agreed and formal instructions were issued by the employer.

In relation to planning delay, the Court declined to grant a declaration. It held that the contract already contained detailed provisions dealing with planning risk, and that any dispute would depend on the specific facts. It was therefore inappropriate to attempt to restate those obligations in general terms.

As to extensions of time, Mace argued that once an extension of time is fixed, it cannot later be reduced. The Court rejected this position and confirmed that, under the Scheme for Construction Contracts, an adjudicator can review and revise an extension of time. However, the adjudicator must do so by re-performing the contractual exercise. That exercise is inherently prospective, as it requires an assessment of what extension would have been fair and reasonable at the time the decision was made.

Commentary

This decision is a clear reminder that a Schedule of Derogations is not a side document. It can materially reshape risk allocation, even alongside heavily amended JCT terms. Where parties intend derogations to have limited effect, this must be expressly stated. The Court’s approach reinforces the principle that all parts of the contract should be given effect where possible.

The decision also reflects the commercial reality of many major projects, particularly complex refurbishments, where design development is iterative and dependent on approvals. It confirms that, where clearly drafted, parties can agree that design responsibility will pass to the contractor in stages, rather than in a single transfer at contract formation. This provides useful support for contractors seeking to manage early-stage design risk, provided that the contractual wording is precise.

Despite extensive amendments to the JCT priority provisions, the employer was unable to rely on those clauses to override the Schedule of Derogations. The Court adopted a practical approach, focusing on how the documents worked together, and resisted any interpretation that would render negotiated provisions redundant. This serves as a reminder that priority clauses are not a cure-all, and that clear and consistent drafting across the contract is essential. Courts do not like disapplying individually negotiated parts of a contract and will avoid doing so if they can.

Although the Court rejected the contractor’s argument on finality, it provided helpful clarification on methodology. The judgment reinforces that extension of time assessments under JCT are forward-looking exercises. Even when reviewed later, the decision-maker must seek to reconstruct the position as it stood at the relevant time, rather than relying purely on hindsight. This is consistent with the position taken by the Northern Irish Courts to assessment of Compensation Events under NEC contracts (Northern Ireland Housing Executive v Healthy Buildings (Ireland) Ltd [2017] NIQB 43) and must be recognised in preparation and assessment of delay claims.

Conclusion

This decision highlights two important points. First, the Court will seek to give effect to all contractual documents, including contractor-led clarifications and derogations. Secondly, the JCT extension of time mechanism remains a prospective exercise, even when revisited after the event.

Both points have clear implications for contract drafting, project administration, and dispute resolution on major projects Please get in touch with the authors if you would like to understand how we can help you with your projects.